Do not talk to Matt Johnsen about old discs - It ends up costing you a lot of money.

I would agree that classic bands don't go over well; Virgin Steel, Leatherwolf, Rage, hell no one down there seemed to know Crimson Glory until they played. People walked out on Jorn's Lizzy and Whitesnake covers, and all the confused faces in the seats during Stars" would back that up.
But I can't believe that some of these "lesser known" bands at ProgPower actually pull in an audience. I also think if the "classic band" was a coice pick of our humble promoter then a lot of the fest goers would get behind that band. I have liked all of Glenn's choice bands, believe he and I might have a lot of simialr taste. But I also think that if he put on a polka group and said it was his personal choice pick all the chanters in the audience would be right behind it.
So yeah there is a few ways Demon could work.
I don't remember them playing Classic Metal fest. But again those fest mention pale in comparison to Progpower as far as visibility. Advertising and packaging does wonders. I think if the Progpower team did something like Classic Metal fest even with the same bands it would have been much different. Not kissing up to the staff have no need to, but they put on the best thing going and no question there.
I know Germany is more of my kind of metal, most of my business partners are there and most of my sells go there. Hellrazor nearly sold out within a year thanks to Germany. Always found it interesting that they appreiate American bands more than America does. Meanwhile every German I know could not careless for Edguy and Blind Guardian.

Re: the "lesser known bands" pulling an audience. I think you and I, at our age, are not necessarily the main target audience. A good deal of their appeal, too, is the exclusive nature of the show. It is quite likely that PPUSA is the only time some of these bands will play the Americas.

Demon played KIT, not CMF. I doubt that CMF would have had the money to bring them over to the US.

There's got to be some Germans that like Edguy and BG, since both bands are in the charts there, but, like you, I don't know any that like either band that much.